March 21, 2024 16:00 GMT+3
As the cryptocurrency market approaches the Bitcoin halving expected on April 25, 2024, supply and demand dynamics are setting the stage for a parabolic rally.
Unlike previous cycles, this year signals a turnaround, fueled by growing enterprise adoption and growing use cases, painting a bullish picture for Bitcoin.
Why is the Bitcoin halving creating an upward trajectory for the crypto market?
The approval and success of Bitcoin spot exchange-traded funds (ETFs) marked a historic milestone in the digital currency's journey. Since its inception, Bitcoin has seen significant price growth of 60%, with trading volumes reaching unprecedented levels.
The influx of institutional interest in Bitcoin ETFs has attracted more than $30 billion in assets under management within two months. This increase in demand is also reflected in inflows that reached $1 billion in a single day. Meanwhile, net inflows have exceeded $10 billion, and daily inflows are three times the daily minted supply.
This scenario is expected to increase post-lockdown, with ETFs holding more than 467,000 BTC, excluding greyscale, significantly outpacing the annual BTC supply of 164,000 BTC.
The current appetite for Bitcoin has already taken up about 4.5% of the accessible supply. Therefore, increased reliance on Bitcoin ETFs could stimulate supply pressure.
“With registered investment advisors overseeing about $114 trillion in the U.S. and mandated to wait 90 days after launching new products before investing, even a mere 1% allocation to Bitcoin could trigger significant inflows, creating significant inflows,” analysts at 21Shares wrote. "Almost doubling their current market value and squeezing supply in the process."
Bitcoin ETF Holdings
Beincrypto
The unwavering confidence of long-term Bitcoin holders, despite market volatility, embodies the unwavering belief in the value of Bitcoin. The supply held by these long-term investors is still around 70% of the total circulating supply.
At the same time, the supply held by short holders has risen by more than 33%, further restricting available supply and signaling an imminent price rise.
According to analysts at 21Shares, the upcoming Bitcoin halving on April 25, 2024, against this background, indicates that the cryptocurrency market may be on the cusp of a unique and perhaps unprecedented bull cycle. With ETFs attracting a new wave of traditional investing and the ingrained conviction of long- and short-term holders of cryptocurrencies alike, the supply constraints of Bitcoin are becoming increasingly apparent.
“If this trend continues, the supply side of Bitcoin will become increasingly illiquid, setting the stage for a supply squeeze and the potential start of a parabolic bull cycle,” analysts at 21Shares concluded.
Bitcoin Supply Held by Long-Term Holders
Beincrypto
While acknowledging Bitcoin's inherent volatility, the current environment appears set for a significant upward trajectory heading into the 2024 halving. This cycle may differ from previous ones and could herald a new era of institutional adoption and financial recognition.
